The second national survey of financial wellness by a major financial institution within two weeks has confirmed that South Africans are generally feeling better about their finances than they were a year ago, a feeling particularly shared by younger generations. This is despite ongoing weaknesses in the economy and record unemployment rates.
The 2024 Sanlam Financial Confidence Index (FCI) report shows that South Africans are preoccupied with present stresses, but there are signs that their financial difficulties have “bottomed out” and a turnaround is underway. This was also the overall conclusion of the 2024 Old Mutual Savings and Investment Monitor, released last week.
The Sanlam study, which was conducted in March, took a broader sample than the Old Mutual one: it surveyed 1 610 working and retired people, from both rural and urban areas, with an income of more than R1 000 a month. (The Old Mutual study surveyed 1 508 urban workers earning more than R8 000 monthly.) The overall FCI score was 47, which denotes “average” on a score of 0 to 100. Below 35 indicates low or very low financial confidence, while a score of 65 and above indicates high or very high confidence.
The index comprises three sub-indices:
- financial self-determination (FSD) – how committed you are to proactively achieving financial goals and improving your life;
- financial resilience (FR) – how well you can handle financial curveballs and adapt to changing circumstances while keeping a sense of stability; and
- financial wellbeing (FW) – your state of financial health and satisfaction, assessing whether you have the resources and knowledge to meet your present and future needs.
While the overall score of 47 was the same as last year, two of the three sub-indices were up: the FR Index from 49 to 50 and the FW Index from 27 to 29. The FSD Index dropped from 59 to 56 points.
In line with the Old Mutual survey, the Sanlam FCI report shows that younger generations of South Africans are more optimistic about the future, are doing more to empower themselves financially, and are showing resourcefulness in exploring alternative income streams.
Mariska Oosthuizen, chief marketing officer at Sanlam, said that what stood out for her was the astuteness and optimism of Gen Z (aged 20 to 28 years), which had higher FSD and FR scores than other generations, possibly due to digital savviness opening access to information.
“We have a real opportunity to shift financial inclusion in South Africa through relevant financial education that empowers a younger generation that’s already entrepreneurial-minded and investing oriented,” she said.
Sipho Mncwabe, regional executive at Sanlam and Sanlam FCI expert, said that although low-income earners were often trapped in the cycle of day-to-day survival, it was gratifying to see that education and skills development were having a positive impact on confidence levels.
“Across all generations and demographics, we saw an eagerness to pursue financial learning. Positively, 69% of South Africans said they continuously build their skills to increase their earning power, and 56% said they believe their personal finance competencies are increasing each year. Financial literacy is pivotal to building a life of financial confidence. People have an immense appetite to learn, and the financial services sector has a duty to keep innovating to make education more accessible,” Mncwabe said.
Key findings in the report included the following:
- FCI remains stable, but one in three people still have a low or very low FCI.
- Gen Z (born 1997-2012) and Millennials (born 1981-1996) exhibited the highest FSD scores, likely due to their digital savviness enabling greater access to information.
- As expected, there was a strong correlation between income and financial confidence. Individuals earning below R8 000 per month displayed significantly lower scores across all metrics.
- Men and women had the same FCI score of 47, although women were slightly more likely to be anxious about monthly finances. Women were also more inclined to write down their financial goals and pursue learning to amplify income.
- South Africans with a matric (Grade 12) certification or lower have lower financial confidence than those with a tertiary qualification. They are also less likely to be able to handle a setback and tend to be unhappy with their current financial situation.
- Despite expressing a willingness to learn, many respondents lacked a defined plan or system for achieving financial goals. Just 36% were tracking their financial goals.
- An entrepreneurial spirit was evident, as in the Old Mutual report, with many people focusing on skills development and income generation. This “hustle” mentality was particularly prevalent among Gen Z and Millennials.
- Only 40% of respondents said they could withstand a financial setback or achieve financial freedom. Most people appear to live payday to payday. Only 34% had insurance that adequately covered their financial risks and only 40% had an emergency fund or savings.
- A growing sense of acceptance of living with debt was observed – 44% of respondents said they had a debt repayment plan in place, up 2% from last year.
- There was slightly more willingness to discuss financial matters openly.
PERSONAL FINANCE